Working Paper Series no. 315: The decreasing returns on working time: An empirical analysis on panel country data

Abstract

An empirical analysis is conducted on two panels of 18 OECD countries to test whether the elasticity of hourly productivity to working time is negative and decreasing with working time itself. If so, the decreasing returns on working time could be indicative of a fatigue effect that increases with working time. We find that the elasticity of productivity per hour to working time is negative and decreasing with working time, but its coefficient is not strongly significant. This study offers empirical support for the hypothesis of a fatigue effect that increases with working time, but with some reservations.

Gilbert Cette, Samuel Chang and Maty Konte
January 2011

Classification JEL : J24, F01, O11, O47

Keywords : Productivity, Working time, decreasing returns